Category: Blog Post

Why solving the housing crisis requires planning reform

Post author By Anthony Breach
Post date May 17, 2020
6 Comments on Why solving the housing crisis requires planning reform

The UK has entered and will leave this pandemic while experiencing a decades-long housing shortage. The country will soon begin to repair the harm done to the economy and society by this disease, but it cannot continue to afford this housing crisis. The inequality it fuels and the damage it causes to national and local economies are too great to bear. We cannot go back to how things were before.

At its core, ending the housing shortage requires more homes. But where new homes are built matters. Yet at present, not enough houses are built in some cities, and arguably too many are built in others. This mismatch emerges as the design of the planning system means it rations the supply of land available for new homes. Ending the housing crisis will therefore require reform of the green belt and a new, flexible zoning planning system to build enough new homes.

The housing crisis is local, not national

The reason why the planning system is so important can be found in the geography of the housing shortage. Some cities have far greater affordability problems than others. For example, while in 2019 the average house in Barnsley cost 5.3 times the local average income, in Brighton that ratio rose to 13.5 times local average incomes. Despite their higher average wages, prosperous cities such as York and Bristol are generally less affordable than places with struggling economies and lower wages such as Dundee or Blackpool.

So solving the housing crisis therefore requires a focus on the most expensive cities with the worst affordability problems. But currently, as Fig. 1 below shows, there is no link between cities’ demand for housing and their supply of new homes. Many expensive cities including Oxford and Bournemouth are building far fewer homes than those which are more affordable such as Wakefield or Telford. The supply and demand of new homes have been disconnected.

Source: EPC Domestic Register 2019; Census 2011; ONS, Annual Survey of Hours and Earnings (ASHE) 2011; Land Registry, Price Paid Data 2011

The planning system disconnects local housing supply from local demand

This decoupling of supply from demand originates in the planning system, as the amount of land it makes available for housing is rationed. Development of new homes normally cannot proceed unless the council decides at their discretion to grant a planning permission to a site. Measures such as the green belt block new homes across large areas of land adjacent to many cities and railway stations, including Bristol, Newcastle, Manchester, Birmingham, and London.

The rationing of land, not prices or affordability or need, ultimately decides how many houses cities build. It explains why some cities which have low demand build more than the average city, and far more than some very unaffordable cities.

The planning system prevents redevelopment in large parts of the existing suburbs

The planning system’s rationing of land can be seen in how it warps the supply of new homes within cities. Consider Exeter, an expensive city which is building lots of new homes above the average rate for cities, in Fig.2 below. A substantial number of homes have been built in the city centre (8 per cent growth since 2011), and there is a cluster of new homes being built on the eastern outskirts of the city, including near the brand new railway station of Newcourt.

Fig. 2 Housing supply in Exeter from 2011-2019

Source: EPC Domestic Register 2019; Census 2011

Nevertheless, 48 per cent of suburban neighbourhoods in Exeter are building less than one house a year. 14 per cent of suburban neighbourhoods in Exeter have actually built no new houses over this period, including a built-up area close to Digby & Sowton station. Even though Exeter has built lots of new houses, the amount of land which has been made available for development has still been subject to rationing.

These dormant suburbs which make little or no contribution to new housing supply are not unique to Exeter. 51 per cent of all suburban neighbourhoods in England and Wales built less than one house a year, or zero, from 2011-2019, providing only 2 per cent of all new suburban homes over that period.

This national pattern across cities emerges from the design of the planning system. As the supply of new homes is controlled by the discretionary granting of planning permissions by elected councillors, it is both uncertain for developers to navigate and sensitive to political pressure from anti-housing activists. The result is that as so much of the suburbs and unremarkable green belt land are off-limits to new homes, new housing supply is forced into easy-to-develop pockets on the outskirts of cities, and pressure for redevelopment is put on city centres and locations such as social housing estates and offices into flats.

Local shortages which emerge from the planning system make inequality worse within and between cities

By stunting the supply of housing in expensive cities, the planning system creates two different inequalities.

First, it drives inequality in housing costs within prosperous cities between renters and homeowners. As rents rise due to the shortage of homes, so does the wealth of homeowning neighbours as through their housing equity.

Second, it drives inequality in housing wealth between homeowners in more prosperous and weaker economies. From 2013-18, average housing equity per house in Brighton rose by £83,000 – but in Doncaster it rose by just £5,000. By preventing new homes from being built in the most expensive cities to stabilise local prices, the planning system reinforces economic inequality in them and across the country.

Ending the housing crisis requires a new flexible zoning system for planning

Solving the housing crisis and tackling these issues requires reconnecting local supply to local demand, and that entails reform of the planning system. Green belt reform is one area where this is needed, and Centre for Cities have calculated that 1.7 to 2.1 million new homes could be built on less than 2 per cent of the green belt within walking distance of railway stations outside Bristol, Newcastle, Birmingham, Manchester and London.

More building by councils and housing associations can play a large role here. However, the root cause of the housing crisis lies not in a specific lack of social housing but in the institutional design of the planning system. For instance, England still has one of the largest social housing sectors in Europe, at 17 per cent of all housing stock, yet it also has one of the continent’s most dire housing crises.

Ultimately, the design of the planning system must change. Building more homes in the most expensive cities will require a shift from its discretionary model towards a flexible zoning system, as in Japan and certain US cities.

This approach, where planning permission legally must be granted if a proposal complies with a national zoning code and national building regulations to ensure the structures are safe, is compatible with more social and council housing. But it would fix the institutional problems the private sector faces by reconnecting local supply to local demand, and end the housing crisis by building more homes in the least affordable places with the greatest need.

Anthony Breach

Anthony is an Analyst who has worked as part of the research team at Centre for Cities since 2017, where he focuses on housing and planning. He won the Thinkhouse Early Career Researcher Prize 2019 for Capital cities: How the planning system creates housing shortages and drives wealth inequality.

Anthony has also worked on research on commercial property in cities, services exports, productivity, and manufacturing. He also has a particular interest in lessons for planning, housing, and UK cities from Japan and the countries of the former Soviet Union. Previously he worked at the Fawcett Society as a Research Officer.

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Tags flexible zoning, Housing, housing crisis, local, Planning, reform, supply, zoning

Blog Post

Fire safety still a major concern for residents three years after Grenfell tragedy

Post author By Abena Oppong-Asare
Post date May 17, 2020
2 Comments on Fire safety still a major concern for residents three years after Grenfell tragedy

The Fire Safety Bill has passed its second reading in Parliament but not without bringing the fears of multi-occupancy residents back to the centre of the housing safety conversation.

The bill seeks to amend the Regulatory Reform (Fire Safety) Order 2005, to clarify which parts of buildings are covered by requirements to manage and reduce the risk of fire by responsible owners. Whilst the bill makes necessary changes to fire safety law, it does not go far enough to meet the Government’s pledge to prevent another Grenfell Tower tragedy.

The Housing, Communities and Local Government Committee has published the findings of a survey into the progress of remediation work to improve fire safety in residential buildings.

The survey found residents continue to face bills of thousands of pounds for remedial or safety measures for a range of issues including combustible cladding, inadequate fire breaks and timber balconies or walkways. It also found that out of 1,352 respondents, 70% said they still had combustible cladding on their building.

Residents of multi-occupancy households have called on the Government to go further in its efforts to improve fire safety. Further to the £1 billion Building Safety Fund announced in the 2020 Spring Budget, residents have called for a pledge to ensure that all forms of dangerous cladding be removed and other safety defects dealt with.

During the 2^nd reading of the Fire Safety Bill, I raised concerns of a constituent who had expressed fears to me regarding a tower block in a neighbouring constituency that was covered in combustible cladding which the landlord was refusing to remove.

The survey conducted by the HCLG committee has given us an insight into the reality of the fear thousands of people face across the country following the Grenfell Tragedy. As we have seen in the previous three years, where a loophole exists some will exploit it, despite the risk posed to residents.

One respondent to the survey said:

“I have highly flammable insulation, missing fire breaks, missing compartmentation, poorly fitted fire protection to the structural steel and poorly fitted fire doors. I fear for my life on a daily basis.”

As many raised during the Fire Safety Bill debate, the Government needs to do much more to ensure the safety of residents in multi-occupancy residences. Like many colleagues pointed out in the debate, the Grenfell Tower tragedy was one that should have been avoided.

As part of my role on the HCLG I will be continuing to hold the Government and industry to account over its failings to support residents in feeling safe in their own homes, so that we never have to experience such a devastating and preventable loss of life again.

Abena Oppong-Asare

Abena Oppong-Asare is the Member of Parliament for Erith and Thamesmead. She was elected as MP in December 2019 and has since been appointed to the Shadow Treasury Team as PPS to Anneliese Dodds.

Abena also sits on the Housing, Communities and Local Government Committee with specific interests in affordable housing and local government funding.

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Tags fire safety, grenfell, HCLG, Housing, RRO

Blog Post

Welcome to the new Red Brick blog!

Post author By Steve Hilditch
Post date May 15, 2020

Red Brick was set up in 2010 as a place for progressive debate around housing issues. Ten years in, after 800 blog posts, it has a new web location, a revamped design, a new editor, and there are ambitious plans to increase the number of contributors.

The challenge is the same: we stand for decent affordable housing for all but there are many and various ways to get to that goal and many people have a contribution to make to the debate. We scrutinise every step of Tory policy and almost always find it wanting.

Covid has exposed how weak our housing system is. Despite the fact that it costs a fortune, much of it is spent in the wrong ways, subsidising demand and not supply, supporting one tenure at the expense of the others, failing to meet the most dire housing need. Solutions are possible – Labour’s Manifesto for the 2019 Election contained many of them – but we have to work them out in detail and make sure the public is aware of them.

One thing seems certain: housing will be an even bigger and more desperate issue after Covid. More people are fleeing domestic violence, more people are facing rent arrears and eviction, social housing is being deprioritised even further. There may be huge disruption in the housing market as the financial implications work through. It will be a time where clear analysis, workable policy proposals, and effective campaigns are needed more than ever.

Red Brick blog is linked to the Labour Housing Group but is editorially independent. Ten years ago, we chose the strapline ‘The Place for Progressive Housing Debate’ because we welcome all contributions and, whatever our individual views, Red Brick has no factional inclinations.

Except we’re not very keen on Tories or Tory solutions!

We are happy to publish both sides of an argument and to enable all opinions to be voiced. However, we celebrate diversity, are steadfastly pro-equalities and against discrimination in any form.

I hope you will continue to read and value the blog so it can continue to contribute in a small way to progressive housing debate. It would be even better if you contributed – just pitch your idea to us, we’ll be happy to help you to put it together for publication.

Thanks to Chris Worrall, Sheila Spencer and Ross Houston from the LHG Executive for the work they’ve put in to make this transition happen. LHG shows signs of a real resurgence as a membership and campaigning body within Labour, which can only be a good thing.

Thank you for reading Red Brick over the last decade and I hope you will continue to do so for years to come.

Steve Hilditch

Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone. Steve sits on the Editorial Panel of Red Brick.

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Blog Post

The five Australian housing system frailties laid bare by COVID-19

Post author By Red Brick Blog
Post date May 14, 2020

by Peter Mares and Hal Pawson

Much as in the UK, the past few weeks in Australia has seen housing policy innovation and emergency expenditure on a remarkable scale. State governments that have historically treated street homelessness as a low priority issue have suddenly found tens of millions of dollars to create pop-up accommodation or book rough sleepers into hotel rooms. Since March literally thousands have been rescued into temporary shelter.

Similarly, panicked by the vision of abrupt mass unemployment triggering a new homelessness crisis, state governments across the country have legislated evictions moratoria.

Federal government has also bolstered the ability of households to meet their housing costs, through the crisis by temporarily doubling the rate of the normally miserly Jobseeker unemployment benefit, and introducing a temporary Jobkeeper wage subsidy to help struggling employers retain staff.

But the need for such short-term fixes also highlights the entrenched failings of Australia’s housing system. This crisis has laid bare five major vulnerabilities.

The need for short-term fixes highlights the entrenched failings of Australia’s housing system. Read how this crisis has laid bare five major vulnerabilities in the latest #redbrickblog
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1. Street homelessness has become a significant problem

Before the pandemic, street homelessness in Australia was affecting about 8,000 people on any given night, as indicated by census data, and up 20% in the last five years. But this is almost certainly an underestimate.

Recent UK research showed the number of people sleeping rough in any given year was five times as many as captured in census-type snapshots. There’s no reason to think it’s much different in Australia. And many more people are on the fringe of street homelessness — couch surfing, for example.

2. More than a million pushed into rental stress

Australia’s second housing system vulnerability is the body of people – far larger again – living in insecure and unaffordable rental housing. Even before this current crisis, unaffordable housing costs had pushed around 1.3 million into poverty. After paying rent they didn’t have enough money left for essentials like food and electricity.

Now many of these renters will have lost jobs or work hours. Government schemes like JobKeeper and JobSeeker will temporarily help only some — temporary migrants and many casual workers are excluded.

Measures like the moratorium on evictions are welcome (provided they prove robust). The same goes for mortgage pauses by the banks, which might help property owners avoid having to sell if tenants can’t afford the rent.

But these are only stopgap efforts.

3. A shrunken social housing sector

The third vulnerability is the shrivelled state of Australia’s social housing, a sector only a quarter the size of its UK counterpart. With virtually no new construction for most of the past 25 years, stock levels have flatlined. Proportionately, it has shrunk from 6% to a meagre 4% of all housing. More importantly, relative to population, the number of properties let by public housing agencies and community housing providers has halved since 1991.

Across most of Australia, waiting lists for social housing are huge. In most jurisdictions the sector lacks the capacity to offer long-term housing to all the rough sleepers and others currently in hotels. Other than through emergency unit acquisitions or head-leasing of privately owned properties, it is hard to see how this will be possible.

4. A mountain of debt

Australia’s fourth housing system vulnerability is the scale of housing-related debt. If the pandemic-induced downturn persists and unemployment stays high, this could make the recession much worse.

In the early 1990s household debt equated to about 70% of disposable household income. In March 2019, the Reserve Bank of Australia warned the debt-to-income ratio had risen to 190%. The increase was mostly due to increased borrowing to buy homes and investment properties.

Even before the pandemic, one in five mortgage holders were struggling to meet repayments. If large scale unemployment were to force mass property sales, this could compound the crash as homes flood the market. Given that Australian banks are more highly exposed to residential property than their counterparts in other OECD countries, this also poses a wider financial risk.

We know from the GFC experience in the USA, Ireland, Spain and elsewhere that a sharp fall in property prices can have severe and long-lasting economic consequences that worsen inequality. In the USA, vulture landlords stepped in to buy up large numbers of distressed properties and create rental property empires. Renting from owners of this kind is not an attractive prospect.

5. An unbalanced housing system

Australia’s housing system is vulnerable to shocks because – much more than in the UK – it is unbalanced, our fifth system frailty. Residential construction depends almost entirely on private developers building for sale to individual buyers.

These buyers are highly sensitive to the outlook for property values. The resulting herd mentality magnifies booms and slumps – a particular problem when they are totally dominant in the market. A magnified downturn can bring residential construction to a grinding halt. And while quick to shed labour, construction is slow to re-employ because of risk and long project lead times.

Construction normally employs more than 1 million Australians with a range of skill levels. It generates many more jobs through the building materials supply chain as well as in real estate, property management and financial services. This helps to explain why the traditionally antagonistic Master Builders Australia and the building union CFMEU have united in a call to government to invest in building 30,000 social housing units as part of Australia’s post-COVID recovery.

The need for a national strategy

Australia’s housing system needs more than a one-off crisis boost. The pandemic policy jolt is an opportunity to put Australia’s housing on more stable footings through a Commonwealth-led bipartisan, long-term, national housing strategy.

A key part of this should be routine social housing construction on a scale that at least keeps pace with population growth. That’s up to 15,000 homes a year – around five times the current number. This may sound ambitious, but it’s below the levels regularly achieved between the mid-1950s and the mid-1970s.

And this doesn’t have to mean a return to the post-war approach when state authorities provided public housing. Not-for-profit community housing organisations can now take on the major new supply role.

But we do need a post-war level of ambition. Government has two immediate roles to play in linking housing to a post-pandemic recovery.

The first is to help avoid a house price crash that will deepen an economic slump. Co-ordinating action with mortgage lenders could help minimise repossessions and avoid a glut of discounted properties on the market. Governments may also need to take on distressed projects from private developers. The New South Wales government has already flagged such action.

The second immediate role for government is to support residential construction as the motor of economic revival by investing in social housing as the central plank of a stimulus package. Government-owned sites and developer-owned landbanks can be used to kick-start activity more quickly than other major infrastructure projects. Community housing providers – especially some larger faith-based players – also have shovel-ready sites.

These should be the prelude to a national housing strategy, something that has been – remarkably – absent in Australia since 1945.

A key strategic objective should be to diversify both housing supply and demand. Alongside a greater role for community housing providers, this could include a build-to-rent sector commissioned by institutional investors to build market rental blocks as long-term, income-generating assets. This development – currently impeded by tax inequities – would benefit tenants and the economy, by smoothing the boom-bust cycle of residential construction.

As we argue in our recent books, a national housing strategy must also thoroughly overhaul national, state and territory tax settings. Many of these have greater housing policy impacts than any spending program.

Reform of this kind – especially to phase down the vast and untargeted tax subsidies enjoyed by small-scale landlords, and to replace stamp duty with a broad-based land tax – could make Australia’s housing system both fairer and more efficient. It could dampen the speculation that fuels rising prices and debt, while raising the revenue needed to provide decent, affordable housing for all Australians.

This is an edited version of an article that originally appeared in The Conversation (Australian edition). Read the original article here.

Hal Pawson

Hal Pawson is Professor of Housing Research and Policy at the University of New South Wales, Sydney. He retains a Visiting Professor position at Heriot-Watt University, Edinburgh where he was based until 2011. He is also an associate of Sheffield University’s Department of Urban Studies and Planning, and a Managing Editor of the international journal, Housing Studies. His latest co-authored book ‘Housing Policy in Australia: A case for system reform’ was published in 2020.

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Peter Mares

Peter Mares is program director at Monash University’s Cranlana Centre for Ethical Leadership and a contributor to Inside Story magazine. Peter is the author of three books: No Place Like Home: Repairing Australia’s Housing Crisis (2018); Not Quite Australian: how temporary migration is changing the nation (2016) and Borderline (2001). The former brodcaster for ABC releases his 4-part radio series, Housing the Australian Nation, on Earshot via ABC Radio National. Available from Saturday 30 May.

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Tags Australia, Hal Pawson, Housing, Peter Mares

Blog Post

UK’s private rental sector – growing but not grown up

Post author By Maureen Corcoran
Post date May 12, 2020
1 Comment on UK’s private rental sector – growing but not grown up

What can we learn from Germany?

One of the biggest changes in housing over the last 20 years has been the huge, unplanned growth of the private renting sector (PRS). But its unfettered growth has come at a price – which is paid for by some of our newly lauded key workers in the NHS and care sectors and the vulnerable – who are sacrificing their life chances, trapped in insecure, unstable, expensive accommodation.

Can Germany, which has the largest PRS in the EU, offer some lessons on a better way of doing things?

This is what I set out to explore last year when I got a Churchill Fellowship to carry out research on lessons we can learn from housing in Germany. The report Private Rented Housing: a broken system in Britain? Lessons to help fix it from 3 cities in Germany has just been published.

Can Germany, which has the largest PRS in the EU, offer some lessons on a better way of doing things? #redbrickblog
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The PRS has grown enormously in the UK. It has doubled to 4.7million – i.e. 1 in 5 households – over the last 20 years, and in England it now houses more tenants than the social housing sector. It is a diverse sector with accommodation ranging from high end to housing of last resort. It is no longer a rite of passage for the young and transient – it is a sector that millions will live in for life.

It houses those who are unable to afford to buy, including many key workers and those in ‘Generation Rent’, and many families who in previous years would have qualified for social housing. The difference is they can be charged four times as much for a private rent as a social rent in areas like London. Sometimes for a neighbouring flat on the same council estate! And unlike their neighbours who rent from a social landlord, private tenants in England have to live with the threat of losing their home on the whim of a landlord as they have Assured Shorthold Tenancies.

The PRS was never designed to fulfil such a major role in UK housing and it needs to change to meet the real needs of our communities.

The picture is very different in Germany. Germany has the largest PRS in Europe – 40% of households rent and this rises to 70% in major cities. Renting is affordable and mainstreamed – not stigmatised.

Overall Germany has a better PRS. ‘Better’ in the sense that it gives tenants greater security of tenure, more affordable rents, higher standards and a stronger voice to advocate for their rights and represent their interests. And it is ‘better’ as a sector that supports and incentivises good landlords for the long term, thus improving local housing provision and sense of community. Crucially, Germany’s local government is stronger and better resourced and this helps Germany to build twice as many homes, including affordable ones, as the UK.

Obviously we cannot transplant another country’s housing system onto our own. Not least because each country’s housing market has grown in different cultural, historical and political environments. However, I found 5 factors that offer some important and transferable lessons for the UK. These are:

Stable and secure tenancies – We all value a stable and secure home – never more so than in the current lockdown. Yet, notwithstanding the current temporary ban, most private tenants in England can be evicted with 2 months notice for no reason, and this will apply after the ban. In contrast Germany, and most of the developed world, have secure, open ended tenancies where the grounds for eviction are based on breaking the rules eg rent arrears etc. Scotland introduced open ended tenancies in 2017 with no reported adverse effects on landlords or supply – so why not England?

Tools for regulating the PRS – Rent levels are more affordable and stable largely because they are regulated. There is data transparency – everybody knows the average rent in their area as they are published in a comprehensive local Rent Index (Mietspiegel). This information is used to help regulate rents effectively. It means rents in Berlin are typically 50% of equivalent lets in London.

A stronger voice for tenants –Tenants have greater access to advice and advocacy through a national network of self-funded tenants associations (Mieterverein). This also gives tenants a strong political voice and more power.

Better support for landlords– One of the surprises in my research was that landlords were as supportive of the German rent regulation system as tenants. They find it provides transparency, encourages good tenants and a more stable long-term rental stream. The system also provides more incentives to good landlords through tax breaks and subsidies.

Growing the supply of affordable housing – a strong local vision translated into building affordable homes and communities – To ensure the PRS works well it needs to be underpinned by an adequate supply of affordable housing. Local Government in Germany is better placed to drive this as it has more powers and is better resourced than councils in the UK. I looked at 3 cities in Germany and found that each had developed its own different, but effective, housing strategies to provide affordable housing and support mixed, vibrant communities in their local areas. The result – stronger neighbourhoods and overall more housing built. Since the end of the 2^nd World War Germany (West and East) has built twice as many homes – 30 million compared to 16 million in the UK.

These are all things we can learn from and implement in the UK.

Most economic and social changes occur after times of war and crisis. After 1945 Britain introduced massive changes, such as the NHS and welfare system. After the 1^st World War the Government introduced the Wheatley Act, which led to extensive council house building programmes. Changes we have reason to be grateful for today.

When we come out of this national Coronavirus crisis we will need to rebuild a better Britain – a new normal.

The current crisis has exposed the unfairness and fragility of our current broken housing system. We clap for the NHS, care and other key workers every week. But the average wage for a nurse is £25k pa. So with London rents averaging £1450 per month this would eat up 84% of their take home pay. They can get a handclap but they struggle to afford a decent home.

It’s good to see the G15 group of large housing associations joining together on the ‘Homes fit for Heroes’ initiative to tackle this. And good to see London’s Deputy Mayor Tom Copley convening a housing taskforce to tackle the challenges Covid-19 poses.

Let’s make fixing Britain’s broken housing system and building homes fit for our new heroes and heroines a priority. So that it serves everybody fairly and establishes the building blocks to a healthier, happier and better-housed society.

To find out more and read the report – Private Rented Housing: a broken system in Britain? Lessons to help fix it from 3 cities in Germany click on https://www.morehousing.co.uk/

The report is also published by the Winston Churchill Memorial Trust and is available on https://www.wcmt.org.uk/fellows/reports/lessons-germany-prs

Maureen Corcoran

Mo Corcoran started in housing as a tenant and community activist in the area where she was born – Waterloo in London – including being a chair of a local housing co operative and a member of the successful Coin Street campaign in London’s South Bank.

She went on to work professionally in housing, rising up the ranks from being a front line housing officer to become Head of Housing in the Audit Commission where she ran the housing inspection regime.

She has also taught on the housing and community studies degree at Birkbeck College and served on several housing association boards. She currently continues to serve as a board member and works as a London Blue Badge Tourist Guide, specialising in tours on social history, housing and the suffragettes.

Mo is a Churchill Fellow.

Tags Germany, Housing market, Private rented sector, PRS

Blog Post

Coronavirus: the poor must not be made to pay for the crisis

Post author By Steve Hilditch
Post date May 12, 2020

It seems likely that one of the groups that the Coronavirus pandemic is going to hit hardest is private tenants. The government’s commitment to do ‘whatever it takes’ appears not to apply to them.

One of the biggest policy fanfares since the crisis began was their trumpeted ‘ban on evictions’. It was a triumph of spin over substance because all they did was was extend the normal period it takes to evict tenants for arrears, adding in a rather soggy new ‘pre-action protocol’. People quickly grasped that this would just store up problems for a later avalanche of cases – unless the policy is extended, the avalanche will start at the end of June. It is an inadequate policy response to the huge additional housing problems being created for private tenants by rampant unemployment, reduced hours and furloughing at 80% wages.

While we wait for the ‘eviction ban’ to be extended or otherwise, an unknown number of private tenants are unable or significantly less able to pay their rent, including those on housing benefit or Universal Credit which only meets part of the rent. Given how high rents are, their debt will rise rapidly and quickly become unmanageable. For many there is little prospect of relief: the economic crisis arising from Coronavirus could last years not just the few months of lockdown. A survey for Shelter estimated that 1.7 million private renters fear losing their jobs this summer. This is a timebomb, not just for tenants but also for landlords and, if homelessness results, for the State.

In the absence of any new policy from government, Labour’s new Shadow Housing Minister Thangam Debbonaire set out a ‘five point plan’ to tackle rent debt. This involves 1) extending the pause to evictions, probably to six months (when other measures should be in place); 2) offering more legal protection to people who got into arrears due to Covid; 3) allowing tenants ‘at least 2 years’ to pay back any arrears accrued during the crisis; 4) giving tenants greater protection from bankruptcy due to arrears; 5) making improvements to Universal Credit to help people pay their rents.

Of course it is right that avoiding evictions should be the top immediate priority. The government seems likely to extend the ban beyond the end of June, but it has not said so yet. The weakness of Labour’s position lies in ‘two years to pay off debt’. This is not a holding position that can be addressed later: the debt is being incurred now and the issue must be tackled now before it is too late.

The policy has not gone down well in many Labour and tenant circles and there are calls for Labour to back a suspension of rent payments to mirror the mortgage holiday. If postponing rent simply creates debt for the tenant, cancelling rent passes the cost on to landlords. As a slogan, ‘make the landlords pay’ has an attraction on the left. I have never supported private renting as a tenure for people on low incomes, but making the sector even more volatile by denying landlords rental income will create conflict and more landlords will look to either remove tenants by any means or to escape from the sector. Good, some people will say to the latter, but this would not be the planned contraction I would like to see, and chaos will have bad outcomes for tenants. And there is an argument that government will end up paying anyway because it would be contrary to human rights legislation to deprive landlords of their legitimate income.

Two principles should guide Labour’s response. First, private tenants should not be left in debt due to Coronavirus. Second, and related, it is the responsibility of the State to ensure that tenants have the means to pay their rent and not become homeless. Some are arguing that Labour should only propose pragmatic policies that the government might accede to. But Labour’s analysis also shapes and informs public and media opinion, and at the moment Labour’s message seems to be that private tenants should have to repay their Covid debts.

So, what policy would help tenants pay their rent NOW rather than slide into debt? Housing benefit used to do this and could do it again. It is a known system and would not have to be invented from scratch like the government’s job protection schemes. HB should pay 100% of people’s rent within reasonable limits by removing the freezes, caps and other restrictions. For those on Universal Credit the system would have to be amended to incorporate the principle of paying 100% of rent through the housing component. It could cater for people put out of work completely, people who face reduced hours, and people who are furloughed at 80% of previous income.

Reinventing housing benefit would mean: Landlords would get paid, there would be no crisis of evictions, no explosion of harassment, and no long term threat to supply; Tenants would avoid large debt and its terrible consequences; and the State would help people in genuine distress due to the Covid crisis and avoid future homelessness. The cost would fall to government and they would be doing ‘whatever it takes’. Labour is halfway to the policy already with its proposals to reform Universal Credit.

When housing benefit was introduced – by the Tories in the 1980s – they accepted the principle that the State should take responsibility for ensuring that tenants can pay their rent whatever their circumstances. This was not through generosity, but part of their ideological shift towards the marketisation of housing: reducing subsidy to ‘bricks and mortar’ (which kept rents low) necessitated increasing income support to enable tenants to pay much higher rents. It was the policy known by the shorthand of ‘letting housing benefit take the strain’. Their deregulatory approach led to the resurgence of private renting that has carried on ever since. It is a free market system but with huge costs for the taxpayer. But it is suited to helping in the current crisis.

Cameron and Osborne, even more right wing than Thatcher, hated the idea of a benefit that covered all of the rent. Under austerity, an endless series of restrictions, caps and freezes forced millions to use a large slice of their money for other things, like food, to pay their rent. Many couldn’t do it, so eviction from a private tenancy has become the most common cause of homelessness. But these policies can all be reversed, and it is not an extreme or fanciful position to call for HB to take the strain.

The idea is not dissimilar to that proposed by Congresswoman Ilhan Omar in the USA. She has proposed cancelling rent and mortgage payments with landlords and mortgage holders having their losses covered by Federal Government. That solution fits the USA – where 31% of Americans could not pay rent this month – but the housing benefit approach fits the UK circumstances better. The principle that it is the State’s responsibility is the same.

Labour’s policy must be driven by a simple rule. The poor paid for the global financial crash. They must not also be made to pay for the global pandemic.

Steve Hilditch

Editor and Founder of Red Brick. Former Head of Policy for Shelter. Select Committee Advisor for Housing and Homelessness. Drafted the first London Mayor’s Housing Strategy under Ken Livingstone.

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Tags coronavirus; private rent

Blog Post

Domestic Abuse #MakeaStand

Post author By Red Brick Blog
Post date May 5, 2020

by Alison Inman

Alison was President of the Chartered Institute of Housing (CIH). She is a Board Member at Saffron Housing Trust, Colne Housing Society, TPAS, and is a co-founder of SHOUT. Her previous roles include being Chair of Colchester Borough Homes and the NFA. Alison is a former member of the Labour Housing Group’s Executive Committee.

I’ve spent the past few years talking to the social housing sector about domestic abuse, why it’s an issue for them, and what they can do about it. The starting point for any discussion is usually that an average of two women a week are killed by a partner or ex-partner in England and Wales, a figure that hasn’t really budged for years. Or, it hadn’t until a few weeks ago. Since the lockdown started domestic homicides have soared, and the number of reports of abuse made to the charity Refuge has increased by 49%. This pattern is being repeated around the world; domestic abuse is itself reaching pandemic proportions and we must make sure that social landlords play their part in tackling it.

It has taken the lockdown to persuade the Government to agree with a coalition of homelessness charities, the women’s sector, the Chartered Institute of Housing, the NHF and many more, that survivors of domestic abuse and sexual violence should automatically qualify for priority need when applying for housing. Good news, but too late for too many women who have had no choice but to return to their abuser rather than face life on the streets.

It is hard to completely disentangle domestic abuse from the wider housing crisis. Acute housing stress means that people often start living together far earlier than they would if there were other, affordable options. And when a relationship breaks down lack of alternative accommodation means people are forced to stay together. Labour’s commitment to a massive programme of social house building will help but there is so much more we need to do. And many women and children do not have the luxury of time.

Work done by the domestic abuse charity Safe Lives for the Sunderland social landlord Gentoo (2018) estimates that approximately 13% of all repair jobs, and 21% of repairs spend, could be attributable to domestic abuse. This shows the business case for Councils and Housing Associations stepping up and making domestic abuse their business. It’s shocking that most victims of abuse first come to the notice of their landlord when they are themselves reported as a perpetrator of noise nuisance. Just think about that for a minute. And almost two thirds of women with significant rent arrears are experiencing abuse in the home. Domestic Abuse really is a housing issue.

The work of the Domestic Abuse Housing Alliance has been key to the understanding of the relationships between physical, emotional and financial abuse and the housing system. They have free resources on their website and their eight stage accreditation guides landlords through a whole range of issues from case management to dealing with perpetrators. The CIH #MakeaStand campaign has hopefully shone a light on the issues for the sector, DAHA accreditation will make sure that local authorities and housing associations adopt the very best practice.

Tags Domestic Abuse, Housing, Safe Lifes, women

Blog Post

NTV – the wheel waiting to be re-invented

Post author By Steve Hilditch
Post date April 2, 2020

Steve Hilditch

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Ten years ago this month, the new National Tenant Voice (NTV) appointed Richard Crossley* as its new chief executive, appointed the National Tenant Council and its board, and started business.

Sadly, it was to be very short-lived, as the general election swept Labour and its dynamic housing minister John Healey MP out of office and installed the Tory/LibDem government with Grant Shapps in charge of housing.

One of Shapps’ first acts was to axe the new-born NTV to save a miserable £1 million a year. Shapps, who could have invented double-speak, ludicrously claimed he wanted tenants to have a stronger say in things. But he saw the NTV as a waste of money as he laid waste to the social housing regulatory system, also abolishing the Tenant Services Authority and the Audit Commission.

The shadow National Tenant Council gathers for its first meeting, 2010.

The NTV had a long gestation and I had the privilege of independently chairing the Communities and Local Government department’s project group, which brought together a majority of tenants with all the other key housing bodies and the civil servants to find a way of meeting the common goal of strengthening the voice of tenants within UK housing. It was a complex process because we wanted the new organisation to have the status of a non-departmental government body, and the rules for establishing one were suitably complicated and not easily adapted for an organisation which would be run by tenants and not appointed by government.

The idea for the NTV as an integral part of the new structure for social housing regulation arose from an earlier report by Martin Cave which was broadly welcomed and accepted by government. The project group conducted a major consultation exercise involving 16 regional meetings with over 1000 tenants, collecting over 160 written responses. There was a huge and occasional fractious debate about the precise role and function of the NTV but the consultation broadly supported the project group’s proposals.

A lot is said about social tenants, and others who live on social housing estates, much of it based on ignorance. Tenants are stereotyped and stigmatised, especially in the media but also by some politicians and housing professionals. By grasping the opportunity presented by the NTV, there is a chance that the authentic voice of social tenants may at last be heard as citizens of equal worth. The NTV will be a voice for change and over time it could help transform the culture of social housing – and thereby improve the lives of nearly 10 million people.

From the introduction to ‘Citizens of Equal Worth, The NTV Project Group’s Proposals for the National Tenant Voice’, Report to Communities and Local Government, October 2008

The NTV’s vision emphasised that it would be a resource for tenants (which included leaseholders and shared owners) of social landlords, an independent organisation that would be accountable to tenants, with clear values of inclusion, accountability and transparency. It would not replace the existing national and regional tenant representative organisations, but would be a business-like support organisation working for all tenants whether in existing organisations or not. It would not in the first instance cover private tenants, but the plan was to consult about if, when and how it would extend its remit.

The key roles of the NTV were

advocacy – helping tenants collectively to speak for themselves to put their views to government and other bodies, placing particular emphasis on seeking and promoting the views of tenants whose voices are rarely heard.
Research – identifying the impact that policies have on tenants and discovering the views of a wide range of tenants on policy issues.
Communication – providing good information to tenants and developing a two-way dialogue with them.
Support – for the existing representative tenants’ movement to help it to develop and strengthen.

The working group and ministers believed that it was important to have a significant number of tenants involved in the governance structures of the NTV – to build its base, to encourage diversity, and to draw more people into policy discussions. It therefore had a National Tenant Council of 50 tenants to consider policy issues and a board of nine tenants and up to 6 independents to take legal responsibility for and to manage the organisation. An arm’s-length accountability committee operated an open recruitment process for the organisation.

Over the last 10 years it has become clear to any observer that the decision made by the incoming Tory government to scrap Labour’s regulatory structure, including the NTV, was a short sighted knee-jerk mistake. Whatever Labour was in favour of, the new government was against. Despite the best efforts of some social landlords and many tenants, since then the voice of tenants has become weaker when it needed to be much stronger. The government (and much of UK housing) took its eye off the ball of maintaining and improving the quality of services to tenants.

It took Grenfell to open the eyes of much of the housing world, the government, and the public to the fact that tenants were not being listened to and their interests were not being served as they should be. Now, once again, there is some acceptance of the need to hear tenants’ voices and to ensure that social landlords are monitored and regulated effectively (as all housing providers should be). But forward movement is even more glacial than the process ten years ago.

Ten years ago, the structure of regulation, with the NTV, was much closer to the right answer for social housing than anything we have now.

The NTV is a wheel that is waiting to be reinvented.

*Richard Crossley was the Chief Executive of the NTV.

Richard died in 2014 of a rare cancer. You can read my appreciation of his life and his work for tenants here.

Blog Post

Coronavirus and housing: Government doing nothing much

Post author By Dermot McKibbin
Post date March 20, 2020
2 Comments on Coronavirus and housing: Government doing nothing much

by Dermot McKibbin

Labour, Housing, Co-operative Party activist, campaigns to replace feudal UK leasehold housing tenure with the modern co-operative Commonhold system.
Vice-Chair Beckenham CLP.
http://getcommonholddone.co.uk/

The government has been accused of being unclear in its communications around Coronavirus. But this headline appears on the Ministry of Housing website; ‘Complete ban on evictions and additional protection for renters’. Poor communication or a straightforward lie?

The policy is actually to ‘suspend new evictions’ until after the crisis, initially 3 months. So, Minister Robert Jenrick’s statement that ‘no renter who has lost income due to coronavirus will be forced out of their home’ is a short-lived commitment.

They call it a ‘radical package’ which it plainly is not. They fail to address basic questions about possession proceedings that are already underway. Surely no-one should be evicted in the current crisis.

So far, no additional measures have been introduced to enable tenants to pay their rent, whether they are in work with reduced pay, laid off from work, or already not working. So, the best that can be said for the policy is that it will defer possession proceedings from starting and will therefore delay eviction. Protection from eviction during the crisis is of course important (although some people have noted that the Courts may well be closed anyway), but what is needed is a policy to prevent tenants being forced into arrears during the crisis, for which they may be evicted afterwards.

Landlords with buy to let mortgages have had the ‘mortgage holiday’ policy extended to them. This is something they can apply for and the devil might be in the detail. But if a landlord qualifies for a holiday, no arrangements have been announced to make sure the benefit of this is passed on or at least shared. Landlords who qualify will of course need to catch up with their mortgage afterwards, although many will add the 3 months to the end of their term, which might be 20 years away. It could be that tenants who pay rent will essentially be creating a short-term cash-flow boost for landlords. Meanwhile, those tenants who cannot pay will accrue arrears, which they may not have the income to repay, and might face possession proceedings when the crisis is over.

At that point the policy falls apart entirely. There will be a strengthened ‘pre-action protocol’ before possession proceedings – engagement between landlords and tenants to establish a repayment plan and to ‘resolve disputes’, during which landlords should ‘reach out’ to tenants to ‘understand the financial position they are in’. Almost unbelievably, “The government will also issue guidance which asks landlords to show compassion and to allow tenants who are affected by this to remain in their homes wherever possible.” I have little belief that the protocol will work in practice as intended. And it not a criticism of landlords – Twitter is full of both good and bad examples of landlord behaviour, that’s how the sector works – to say that NO policy should be determined by hoped-for ‘compassion’ rather than rights and obligations in law.

In practice, many tenants may be saved by the fact that landlords will see value in hanging on to existing tenants even if they get into Coronavirus arrears. Given the broadly-based reduction in incomes and hence savings that is likely over the next few months, one predictable market correction might be a reduction in rents and the costs of starting up new tenancies. Under these circumstances, keeping a tenant on an existing contract might be an attractive option.

Given that the Chancellor was talking in terms of hundreds of billions of pounds in loans for businesses, the government should be pushed into actions like those taken in other countries to guarantee incomes, putting money directly into the hands of those who are affected by the crisis to enable them to maintain the basics of existence. I would argue that the same should apply to the biggest cost of all, housing. Affected renters must be enabled to pay their rent through direct support from government, not the goodwill of landlords (private and social) – although that is also to be encouraged.

I’m not expert enough to know the best detailed mechanism for achieving the aim of enabling people to pay rent, I assume it’s a mix of entertaining new emergency housing benefit claims, changing Universal Credit rules (paying it immediately, guaranteeing that the housing element will cover all of the rent), and relaxing current policies like the bedroom tax (otherwise how are people to obey the government and ‘sleep in the spare room’ if they get Covid19?). But the purpose of policy must be to enable people to pay their rent during the crisis and to avoid the debt which will create a crisis later. Even the awful Iain Duncan Smith has called for benefit rates to be increased.

Jenrick’s performance as Housing Minister during all this has been exceptionally poor and uncaring. Homeless people and tenants have been inconvenient afterthoughts with half-baked inadequate policy responses. Some loose change for rough sleepers, nothing that I have seen for people living in temporary accommodation (eg extra rooms), no workable special arrangements for people living in shared accommodation or overcrowded housing.

Of one thing I have no doubt: Jeremy Corbyn and John McDonnell would have risen to the challenge – indeed they are doing so in opposition – in a way that Johnson is incapable of doing. Because today’s Tories have not learned the lesson that was learned by the Victorians – as we are reminded by Jules Birch

Go back a century and more, and it was public health concerns about infectious disease spreading from insanitary slums that led to the rise of council housing and the birth of the welfare state in the first place.

If the Coronavirus is as bad as some are predicting, this lesson will have to be learned all over again.

As the government publishes the required legislation, keep in touch with commentary via the excellent @nearlylegal twitter feed and blog and of course @insidehousing

Blog Post

Official crackdown on fleecehold

Post author By Dermot McKibbin
Post date March 16, 2020

by Dermot McKibbin

Get Commonhold Done!

The Competition and Market Authority (CMA) is about to take legal action against housing developers on behalf of leaseholders who were mis-sold their properties by leading housing developers. Such a move is unprecedented and if fully supported by all progressive opinion in England and Wales would be an important step in abolishing and not merely “polishing up” the antiquated leasehold tenure system in England and Wales.

The CMA has wide powers to require business organisations to remove unfair contract terms from consumer contracts and can apply to court for an injunction to prevent their continued use.

The CMA is concerned that leasehold “homeowners” have been unfairly treated and prospective buyers misled by housing developers.

These concerns include:

Ground rents: homeowners having to pay escalating ground rents, which in some cases can double every 10 years. This increase is often built into contracts, meaning people can often struggle to sell their homes and find themselves trapped.
Cost of the freehold: the CMA has seen evidence that people have been misled about the cost of converting their leasehold to freehold ownership. When buying their home, some people were told the freehold would cost only a small sum, but later down the line this price had increased by thousands of pounds with little to no warning.
Misleading information: not being told upfront that a property is leasehold and what that means. Some developers are failing to explain the differences between leasehold and freehold when directly asked, and some tell potential buyers that there is no difference. By the time people find out the realities of owning a leasehold, including the regular charges to be paid, they are often unable to pull out of the purchase, or would face significant difficulties if they tried to do so.
Unreasonable fees: being charged excessive and disproportionate fees for things like the routine maintenance of a building’s shared spaces or making home improvements. If people want to challenge such charges, the process is often difficult and costly, meaning few people decide to go through with it.

In some ways the CMA intervention is surprising. A 2014 report by the CMA into the leasehold housing market gave it a clean bill of health. Cardiff Trading Standards has already settled a mis-selling case against Persimmons one of the biggest housing developers. An out of court settlement meant that the company agreed to give freehold title to leaseholders who complained that they had been sold leases instead of full ownership of their properties.

The truth is that the CMA has been sat on by the powerful all-party House of Commons Select Committee in its bi-partisan critical inquiry into the leasehold system in March 2019. The leasehold lobby is increasingly influential. The Facebook page for the National Leasehold Campaign now has over 17,000 followers and growing. The All Parliamentary Group on Leasehold reform currently stands at 153 members.

The CMA have correctly picked up that some leaseholders will come within the scope of the 1988 Housing Act. Where ground rents exceed £250 per year or £1,000 per year in London, a leaseholder is classed as an assured tenant. This means, for even small sums of arrears, leaseholders can be subject to a mandatory possession order.

Unfortunately, the CMA have given the solicitors involved a clean bill of health. Builders required prospective purchasers to use their own solicitors who failed to tell their clients that they were not in fact buying a freehold property. It is remarkable that this conflict of interest is compatible with professional conduct rules. These solicitors are now subject to negligence claims by fresh lawyers.

This pending enforcement action is embarrassing for the Government who had persuaded housing developers to sign up to a voluntary code of practice in order to “limit” the damage of toxic leases. There are links between housing developers and the Conservative party.

Unlike the rest of the English-speaking world, England and Wales has the leasehold tenure system. This originates from 1066. William the Conqueror seized all the land after his invasion. He leased land to his barons in return for services. They in return leased land to their supporters in return for services. This ultimately led to the freeholder and tenant relationship.

In America, riots and the formation of the Anti-Rent Party in the nineteenth century lead to the abolition of feudal tenures.

A lease is a wasting asset. Once it runs out, a leaseholder becomes a mere tenant. Lenders are reluctant to lend on short leases. Leasehold do not own the land their property is built on. This is owned by the freeholder for which they pay a ground rent. The freehold title can be sold on a third party without the knowledge or consent of the leaseholder. If a leaseholder breaks the lease, the freeholder can exercise the nuclear right of forfeiture and if successful the leaseholder is evicted thereby losing any equity in the property. There are problems with high service charges and permission fees.

Leasehold reform is rapidly moving up the political agenda. The House of Commons Select Committee is launching an inquiry into the cladding scandal in residential blocks. The Law Commission is about to publish a report on how to develop the Commonhold tenure. Commonhold is a form of tenure whereby all the residents in a block own the freehold title. Each flat owner automatically becomes a director of the company that owns and manages the shared areas. There is no freeholder or ground rent. Commonhold is in effect a type of property-owning housing co-operative.

Surprisingly there are no accurate figures for the precise number of leasehold properties in England and Wales. Estimates vary from 4 million to 7 million properties. It is thought that two thirds are flats and one third houses. Of the 20 parliamentary constituencies with the highest number of leasehold properties, all of them are in London. 18 are held by Labour and 2 by the Conservatives. The 20 parliamentary constituencies with the highest number of leasehold houses are in the North-west of England. 10 are held by Labour. The other ten were won by the Tories in the last two general elections.

If all leasehold properties were converted to the Commonhold tenure over the lifetime of a Parliament as envisaged by the Labour Manifesto in 2019 this would lead to the biggest ever increase in the number of properties that are owned co-operatively. All sections of the Labour and Co-Operative Parties need to be seen to be campaigning with leaseholders if their votes are to be won.

Dermot Mckibbin

Beckenham Constituency Labour party.

Twitter @dermotmckibbin1